People on Social Security could see a huge spike in their checks from a cost-of-living adjustment (COLA) that is itself a result of inflation.
In a letter sent on Tuesday, Senior Citizen League policy analyst Mary Johnson said recipients could see an 8.7 percent COLA spike next year.
That's a huge increase reflective of the high inflation people are experiencing across the country, though at the same time is is actually a smaller COLA like than the SCL projected just a month ago. At the time, Johnson was forecasting a 9.6 percent hike.
“After evaluating the August consumer price data, what I’m finding clearly illustrates the weakness in our inflation adjustment system for Social Security. My COLA estimate has dropped to 8.7% almost a full percentage point from the 9.6% that I forecast last month, Johnson wrote in her letter.
“That was a significant drop, but the Consumer Price Index, CPI-W (CPI-W), the index that Social Security benefits are based on, has decreased even —by 1.10 percentage point year over year to 8.7%,” the letter sated.
The 8.7 percent COLA would increase the average retirees' benefit from the $1,656 they receive monthly to $1,800 by next year, an increase of $144.10.
This is also the highest COLA increase since 1982, when the Social Security Administration (SSA) estimated a 7.4 percent increase in the cost-of-living adjustment.
That might not translate into much more money for people living on their Social Security checks, however, given rising costs for goods and healthcare expenses.
“Across the board, retired and disabled Social Security recipients spend a bigger portion of their incomes on healthcare costs, housing, and food and less on gasoline,” Johnson said. “Over the past 12 months, they rank food costs as their fastest growing expenditure, housing, and transportation in that order.”
The Labor Department on Tuesday announced that consumer prices rose in August by 0.1 percent despite a drop in gas prices, news that triggered a steep stock selloff by aggravating concerns that inflation is not easing.